Time in a compounding strategy is your biggest friend. The longer your investment is allowed to Compose, the larger your Account will be.
If you have a ‘super’ busy life and have a lump sum to invest, after making the initial investment there is nothing else to do. Get on with your life and watch your dividend reinvestment strategy unfold.
Compounding involves adding to your original invested capital each year, and then that new balance to be added in the next year, and so on. Buy strong dividend-paying companies like Dividend Aristocrats and you’ll be assured of the best capitalization strategy available.
Dividend aristocrats not only pay dividends every year, their track record of dividends through all kinds of market upheavals, their dividends also increase every year. This means increasing dividend yield for the compounding strategy, and when combined with the reinvestment of dividends, you have 2 strategies in one!
Most pay increasing dividends 4 times a year, so regardless of the current state of the market, these companies take care of the reinvestment for you. There is no temptation to sell in a big drop, just let the reinvestment strategy take care of itself and LET IT BUILD UP.
Your time is yours, after making the original investment, simply “put it in the bottom drawer” and watch it composed for as long as you want.
In the last big ‘crash’ in the market (2008-2009), 10 shares of Dividend Aristocrat were removed from the Dividend Aristocrat Index due to changes in their dividend policy (they cut your dividend), so be sure to only invest in the ‘ bigger and better. ‘ The longer they have paid increasing dividends and remain in the Index, the better.
Companies like McDonald’s, Johnson & Johnson, 3M, Wal Mart, which have paid increasing dividends for decades, through all kinds of economic shocks or shocks, are the ones to invest in.
If you are investing through a savings plan, you are probably adding to your investment once a year, so again your time is yours.
Even if you are 10-20 years old until retirement, don’t “put off” this strategy, as compounding is the best “hands-off” strategy out there. Even if they only take care of your bills in retirement, that’s a huge advantage, the alternative is not pretty.
The best holding period for this strategy is ‘forever’, but when you finally need the money, there is no need to sell, just change the reinvestment part to cash dividends, and everything is ‘sweet’. With no capital gains tax, as no shares have been sold, you will receive a ‘GROWING’ income stream forever!
Time is your FRIEND in a compound investment strategy, so get started NOW.